The plaintiffs, Wells Fargo Equipment Finance Co and C&C Machine Movers & Warehousing Inc, are the lessor and lessee of a truck loaded onto a barge, the MLT-3 (previously known as the Bell Copper No 3). The defendants are: (i) the barge; (ii) the barge's owner, Cosulich Group Investments Inc (Cosulich); (iii) the barge's bareboat charterer and subsequent owner, Mercury Launch & Tug Ltd (Mercury); (iv) the tug towing the barge, the Mercury XII, (v) the tug's owner, Mercury; and (vi) the tug's captain, Neil Paterson.

An accident occurred when the truck was being backed onto the barge. The mooring ropes onshore were not secured to the barge. The barge was held in place solely by the backward thrust of the tug. Due to the tide, the barge moved away from shore and despite applying the air brakes, the front end of the truck fell into the water. Efforts were made to salvage the truck but the barge turned sideways and the entire truck fell into the water.

The issues before the Court were: (i) whether Cosulich, the owner of the barge at the time of the incident, who had bareboat chartered and subsequently sold the barge to Mercury Launch & Tug Ltd, was liable to the plaintiffs; and (ii) whether the Hague-Visby Rules (set out in Sch 3 of the Marine Liability Act, SC 2001, c 6 (MLA)) and the time bar in art 3.6 of the Rules apply.

The Federal Court held that Cosulich was not liable, and that the Hague-Visby Rules and the time bar did not apply: see Wells Fargo Equipment Finance Co v Barge MLT-3 (CMI1150). Mercury appealed to the Federal Court of Appeal.

Held: Appeal dismissed.

Section 41 of the MLA defines the Hague-Visby Rules, which are contained in Sch 3. Section 43(1) of the MLA gives effect to the Hague-Visby Rules in Canadian law. Although the Rules apply only to contracts of carriage of goods between countries, s 43(2) makes the Rules also applicable in Canadian law to contracts for the carriage of goods by water within Canada. The words of s 43(2) identify the requirements for the application of the Rules.

The Judge below held that s 43(2) of the MLA did not extend the application of the Hague-Visby Rules to the facts of this case. However, he based his decision on a ground that had not been argued before him, namely that the contract respecting the transportation of the truck was oral and that the carrier had not issued a bill of lading. Counsel for both parties agreed that the Judge was wrong in saying that s 43(2) of the MLA limits the application of the Rules to written contracts. Counsel for Mercury also argued that the Judge had erred in stating that the Rules did not apply because no bill of lading had been issued. Counsel submitted that, properly interpreted, s 43(2) provides that the Rules apply to a contract for the carriage of goods by water within Canada, unless there is no bill of lading and the contract provides that the Rules do not apply. In the present case, since no bill of lading had been issued, the first statutory condition was satisfied. However, the second condition was not, because the contract did not expressly exclude the Rules.

In order to succeed in this appeal, Mercury must establish that all the conditions in s 43(2) of the MLA have been met. Mercury has failed to establish that its contract was a contract for the carriage of goods within the meaning of s 43(2), rather than a contract for the charter of the tug and barge.

The starting point for the analysis of this issue is the decision of this Court in Canada Moon Shipping Co Ltd v Companhia Siderurgica Paulista-Cosipa, 2012 FCA 284 [77]-[79] (CMI1151). Writing for the Court, Gauthier J held that the term 'contract for the carriage of goods by water' in s 46 of the MLA does not include a contract for the charter of a vessel. Counsel for Mercury pointed out that the issue in that case concerned s 46 of the MLA, which permits a claimant, in certain circumstances, to institute proceedings in a court or arbitral tribunal in Canada, despite a clause in the contract stipulating that the adjudication of claims arising under the contract shall be adjudicated in a place other than Canada. He argued that the purpose of s 46 was to curb the commercial power of carriers to dictate to shippers onerous arbitration clauses, a power not possessed by charterers when entering into a charter party. Since this is not the mischief at which s 43(2) is aimed, it should not be interpreted, like s 46, as excluding charterparties.

The Court does not agree. First, Parliament is presumed to use language consistently, so that the same words in a statute are presumptively intended to have the same meaning. This presumption is particularly difficult to rebut when the words appear relatively close together in a statute. The term 'contract for the carriage of goods by water' appears in ss 43, 45 and 46 of the MLA. The legal nature of the term also tends to strengthen the presumption. Second, Gauthier J did not limit her interpretation of contracts for the carriage of goods by water to s 46. Thus she said (at [57]):

It is important to note that none of the international regimes discussed above [including the Hague-Visby Rules] regulate the rights and obligations to a charter-party. They all specifically mention that the rules will essentially only come into play when a distinct contract for the carriage of goods exists or 'springs to life', for example through the endorsement of a bill of lading between a carrier and a person who is not a party to a charter-party.

Therefore, as a matter of statutory interpretation, a contract for the carriage of goods in s 43 of the MLA does not include a charterparty.

Mercury has not established that its contract was a contract for the carriage of goods rather than a charterparty. Indeed, what little evidence there is in the appeal record about the terms of the contract suggests that the contract might well have been a charterparty: that is, a contract for the hire of the tug and the barge, rather than for the carriage of goods. Mercury has therefore not discharged its burden of establishing on a balance of probability that its contract was a contract for the carriage of goods, rather than a contract for the hire of the tug and the barge. Parliament cannot be taken to have intended this contract to fall within s 43(2) of the MLA so as to subject the claim to the one-year limitation period contained in art 3.6 of the Hague-Visby Rules.